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Statement Before the U.S. House Committee on Agriculture

Statement of Jon W. Dudas, Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office
before the

Committee on Agriculture
U.S. House of Representatives

July 22, 2003

Chairman Goodlatte, Ranking Member Stenholm, and Members of the Committee:

Thank you for this opportunity to testify today on an important type of intellectual property known as "geographical indications." As you know, certain of our trading partners at the World Trade Organization are calling for the immediate termination of U.S. usage of commonly known food terms such as "FETA," "PARMESAN," "BURGUNDY," "CHABLIS," "CHAMPAGNE" and "BOLOGNA."

While hardly a household term, geographical indications have been the subject of a number of articles in publications ranging from the Wall Street Journal to the Dallas Morning News. This growing attention is fitting, given that geographical indications are a key feature on many agricultural and food product labels and are valuable business interests that play an integral role in promoting U.S. trade and consumer awareness. The heightened publicity is also warranted in light of the efforts underway by some of our trading partners in the World Trade Organization (WTO) to undermine these valuable intellectual property rights by treating geographical indications solely as trade interests and ignoring intellectual property principles. Such efforts, if successful, would seriously impact our domestic producers, consumers, and trademark owners. In short, the subject of today's hearing is particularly timely, and I commend the Committee for focusing attention on this important matter.

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A geographical indication (GI) is a sign used to indicate the regional origin of particular goods or services. The WTO's 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs Agreement) defines GIs as indications which identify a good as originating in the territory of a member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographic origin. GIs are not just place names: they are signs that indicate to consumers some important characteristic of the goods or services that is attributable to their geographic origin. Examples of geographical indications from the United States include "FLORIDA" for oranges, "IDAHO" for potatoes, "WASHINGTON STATE" for apples, and "NAPA" for wine.

The United States protects geographical indications through our trademark system because, like trademarks, GIs are source-identifiers, indicators of quality, and business interests. As with trademarks, geographical indications are eligible for relief from acts of infringement and unfair competition.

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At the international level, GIs fall under the purview of the TRIPs Agreement. The TRIPs Agreement establishes the minimum standards for the protection of geographical indications within WTO member countries. The TRIPs Agreement and, thus, the TRIPs GI standards, are the result of trade negotiations during the Uruguay Round. In other words, the provisions and exceptions contained in the text were part of an overall package of balanced trade decisions-an appropriate give and take.

The TRIPs Agreement requires WTO members to provide the legal means for interested parties to prevent the use of a GI that: (1) indicates or suggests that a good originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the good; or (2) constitutes an act of unfair competition.

Because some European countries wanted a "higher level" of protection for geographical indications for wines and spirits, a provision was negotiated in TRIPs that requires WTO members to provide the legal means for interested parties to prevent the use of GIs for wines and spirits that do not originate in the place indicated by the GI, even if the public would not be deceived by its use.

The United States agreed to the European demands for this provision for wines and spirits because the TRIPs Agreement include exceptions which protect our industries. For example, the TRIPs text contains an exception that protects U.S. wine and spirits producers who use generic terms to describe their goods. TRIPs does not require that a WTO member extend protection to a GI if that GI is the "generic" name for the goods in the member. For example, in the U.S. the word "CHABLIS" is often used to refer to various types of white wine. Since "CHABLIS" is a generic term in the U.S., we can continue to permit use of word "CHABLIS" as a synonym for "white wine." Similarly, "CHAMPAGNE" is considered a generic term and in the U.S. means any light-colored wine with bubbles.

In addition to exceptions for using generic terms, the TRIPs Agreement offers important protections for U.S. trademark owners who use and/or register marks in good faith, in the instance that a trademark happens to conflict with a geographical indication. A trademark that has been used or registered in good faith in one jurisdiction cannot be preempted by a later established GI that conflicts with the trademark. In fact, the later in time geographical indication cannot even be used if it conflicts with an earlier-established, good faith trademark. For U.S. producers, this means French cheese producers do not have a basis to cancel U.S. trademarks that contain terms protected in France merely because the goods do not come from France.

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Geographical indications are well understood in the United States because we protect GIs through our trademark system as certification or collective marks, which are types of trademarks. Because the trademark system is well understood and well established, we have a successful systemic approach to protecting geographical indications, allowing domestic parties, foreign parties, governments, and even individuals the legal means for creating, maintaining, asserting, defending and challenging rights in GIs. That understanding is not shared worldwide. There is very little international consensus on the appropriate framework of protection for GIs. While the TRIPs Agreement sets out minimum standards, it does not dictate the system that WTO Members must implement to protect GIs.

In the absence of consensus, some WTO members are attempting to advance a framework of protection that would deprive U.S. producers, trademark owners and consumers of the benefits negotiated in the TRIPs Agreement in 1994. For example, within the WTO at the TRIPs Council meetings and at the WTO Agriculture Committee negotiations, the European Union (EU) is demanding exclusive use for EU producers of certain commonly used wine terms such as "BURGUNDY," "PORT" and "CHABLIS." The EU is claiming that these common wine terms are GIs and are misleading on any wine that does not originate from the EU in the area named. Other like-minded countries are also advancing this so-called "claw back" agenda. Furthermore, those attempting to undercut U.S. interests by renegotiating the obligations in the TRIPs Agreement are arguably not fulfilling their current obligations under TRIPs.

In the ongoing U.S. EU wine negotiations, the U.S. government is working closely with our wine industry to reach a negotiated settlement that would adequately compensate U.S. wineries in return for voluntarily giving up the use of generic wine terms the EU claims as its own. Compensation could include adequate protection for U.S. geographical indications, as well as mutual acceptance of U.S. winemaking practices, reductions to EU wine tariffs and subsidies, and the removal of market restrictive EU certification and labeling requirements. To allow U.S. companies time to adjust, any eventual phase out of generic wine terms would take years to complete.

Disposition of the geographical indications issue is part of the Doha Development Agenda, on which ministers will focus in September at the WTO Ministerial in Cancun, Mexico. At the Cancun meeting, the EU will likely call for worldwide termination of certain generic terms to describe food and wine unless those products come from a specific geographic region in Europe. If the EU is successful, use of generic terms which could include "FETA" and "GORGONZOLA" for cheese and "PORT" and "SHERRY" for wine terms now considered generic in many WTO member nations and not just in the U.S.-would be prohibited in the U.S. and in all of our export markets.

Quite simply, the United States may be facing demands to give away our WTO entitlements in exchange for nothing. For example, from an intellectual property perspective, it is unclear that those requesting "claw back" at the WTO and in bilateral negotiations are offering any protection for U.S. geographical indications. We are particularly concerned because U.S. GI owners appear to face systematic discrimination in the EU. Significantly, not one U.S. geographical indication is currently protected in the EU under the EU's Agriculture Regulation. The United States has requested consultations in the WTO over this issue alleging, among other things, that EU regulations appear to be inconsistent with the national treatment and MFN provisions of the GATT. Just as troublesome is the fact that U.S. trademarks, such as 'BUDWEISER' and 'BUD,' are being subject to termination in various Member States of the European Communities because the EU believes that 'BUDWEISER' and 'BUD' are geographical indications for beer from the Czech Republic.

In contrast, the United States provides robust protection for geographical indications, whether of domestic or foreign origin. Examples of GIs protected under the U.S. certification mark system include: "BANSHU SOMEN" for noodles from Japan; "COLOMBIAN" for coffee from Colombia; 'DARJEELING' for tea from India; "JAMAICA BLUE MOUNTAIN," for coffee from Jamaica; 'PARMA' for ham from Italy; "PARMIGIANO- REGGIANO" for cheese from Italy; 'ROQUEFORT' for cheese from France; and 'SWISS' for chocolate from Switzerland.

It appears that the EU is asking the U.S. government, U.S. producers, and U.S. consumers to subsidize EU producers through this 'claw back' of generic terms so that EU producers can charge monopoly prices for their products. Why should U.S. consumers subsidize EU producers? We see no basis for our producers, trademark owners, and consumers to be asked to stop the use of generic terms. And what system that promotes fairness for trademarks and geographical indications is being proposed by the European Union to protect our trademarks and GIs abroad?

Mr. Chairman, the United States is deeply concerned by the efforts by the EU and others to substantially restructure the standards for protecting intellectual property rights in geographical indications. I am hopeful that today's hearing will shed much-needed light on the EU's proposal and, in so doing, help preserve strong and equitable protection for geographical indications and trademarks in the U.S. and throughout the world.